For many years, issues with copyright management were a major impediment in the music industry. The current system always implies a disparity in the level of information held by musicians and intermediaries. The main issue is that publishers are charging higher fees and are delaying royalty payments to artists.
Blockchain has recently revolutionized music as well as many other industries. A blockchain is an open, digital, and decentralized ledger that can record and execute transactions between two parties in real time, without the need for a centralized authority like a bank, in a verifiable and immutable manner (Arya 2019). In the best interests of artists and content creators, technology has not only restructured but also decentralized the music industry. The most important takeaways include increased transparency among all parties, automatic payment execution, removal of unwanted third-party fees, and increased pay-out for artists and content creators.
NFTs are a new technology that functions as digital assets that represent both tangible and intangible items of value. Fungible assets, such as bitcoin or dollars, differ significantly from non-fungible assets, despite the fact that both are used in the cryptocurrency space. Fungible assets are divisible, which means they can be divided into smaller fractions of units with similar properties. Because these fungible assets are indistinguishable from one another, they can be used as a payment mechanism. Non-fungible assets are indivisible and unique, which means they cannot be divided to represent a fraction of the total, and each asset is distinct from the others, with a unique code underlying each asset. NFTs are non-fungible assets based on smart contracts that contain customized information, making each NFT unique (“Non-Fungible Tokens (NFTs): Crypto Collectibles” 2022).
Crypto music, also known as Audio NFT, can be an album, a song, a piece of merchandise, or album artwork. An artist could use NFTs to track all sources of revenue – streams, merchandise, touring, licensing, royalties, and more – all neatly organized and instantly updated so the artist is never in the dark about where they stand in terms of revenue generation (Heap 2017). This data can then be used to inform and execute smart contract-based automatic payments to various parties involved in the release process. The album “Kings of Leon” by the Tennessee brothers was breaking into Crypto Music by releasing their first album as a non-fungible token (NFT). The Kings of Leon brought in $2.5 million in sales in 2021, followed by Visual Artist Grimes with $7 million (Rossolillo 2022).
Although the technology has many advantages, the main barrier to adoption for blockchain in the music industry is acceptance among the industry’s masses. To make this work, all of the different players – artists, publishers, distributors, and management organizations – must agree to use this technology (Heap 2017). Many people find it difficult to comprehend the underlying technology, which necessitates knowledge and patience. In addition, in order for technology to be widely adopted, it must become more user-friendly. Another consideration is cryptocurrency energy consumption, which has recently become a hot topic of discussion.
Although it is possible to predict that blockchain will transform the music industry in terms of copyright tracking, accurate and timely royalties payouts, and revenue stream tracking, the technology is still in its early stages, and no one knows for certain what it will look like in ten years. Blockchain has enormous potential in the music industry, we may not be fully prepared for its adoption just yet. There are still aspects of technology that haven’t been fully developed and are causing problems. These issues must be addressed and resolved in order for this technology to reach its full potential and gain widespread acceptance.
It is unlikely that all traditional roles in the music industry will become completely obsolete, but if this occurs, these entities will most likely serve different purposes. The most important thing that needs to happen in order for blockchain to be adopted and legitimized within the industry is for the technology to be widely adopted. In order for this to happen, the artists must band together and incite a revolution.
Bibliography
Arya, Taghdiri. “How Blockchain Technology Can Revolutionize the Music Industry.” Journal of Sports & Entertainment Law, Harvard Law School, vol. 10, no. 2, 2019, pp. 172-196. Harvard university, https://harvardjsel.com/wp-content/uploads/sites/9/2019/05/HLS201.pdf.
Heap, Imogen. “Blockchain Could Help Musicians Make Money Again.” Harvard Business Review, 5 June 2017, https://hbr.org/2017/06/blockchain-could-help-musicians-make-money-again. Accessed 21 March 2022.
“Non-Fungible Tokens (NFTs): Crypto Collectibles.” Gemini, https://www.gemini.com/cryptopedia/nft-non-fungible-token-crypto-collectibles. Accessed 21 March 2022.
Rossolillo, Nicholas. “Investing in Music NFTs.” The Motley Fool, 8 March 2022, https://www.fool.com/investing/stock-market/market-sectors/financials/non-fungible-tokens/music-nfts/. Accessed 19 March 2022.
